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Government report on its performance in 2013

22 April 201412:30State Duma of the Federal Assembly, Moscow

“The Government of the Russian Federation (…) shall submit to the State Duma annual reports on the Government’s performance, including on issues formulated by the State Duma.” (Constitution of the Russian Federation, Article 114, Clause 1, Subclause “a”)

Government report on its performance in 2013

Government report on its performance in 2013

Government report on its performance in 2013

Government report on its performance in 2013

Remarks by Gennady Zyuganov, head of the Communist Party parliamentary group

22 April 2014

Remarks by Vladimir Zhirinovsky, head of the Liberal Democratic Party parliamentary group

22 April 2014

Remarks by Deputy State Duma Speaker Vladimir Vasilyev, head of the United Russia parliamentary group

22 April 2014

Remarks by Sergei Mironov, head of the Fair Russia parliamentary group

22 April 2014

Government report on its performance in 2013

Dmitry Medvedev: Good afternoon, Mr Naryshkin (Sergei Naryshkin, State Duma Speaker), State Duma deputies, colleagues. Acting in accordance with the Constitution, I will present the Government’s report on its performance last year.

This is the sixth report, so the procedure has been tried and tested. I consider this practice to be very useful and justified, because dialogue is the only way to make our joint work maximally efficient and understandable for the absolute majority of people.

Dmitry Medvedev: "This is the sixth report, so the procedure has been tried and tested. I consider this practice to be very useful and justified, because dialogue is the only way to make our joint work maximally efficient and understandable for the absolute majority of people."

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In fact, by submitting this report to the State Duma, the Government reports to the country and its people in general. I believe that this dialogue will continue, building on the interesting, burning and specific questions you always ask.

I would like to say a few words about our joint efforts this and last year. Of course, the Government keeps a constant liaison with the State Duma, and 2013 was no exception. The Deputy Prime Ministers, ministers and agency heads addressed this assembly regularly during the Government Hour, while State Duma deputies took part in Government meetings and initiatives implemented by coordination and advisory bodies. The legislative process naturally took centre stage. The commission was up and running and made coordinated decisions.

Dmitry Medvedev: "In 2013, the President signed 448 federal laws of which 252 were drafted and submitted for approval by the Government."

These efforts yielded the following results: in 2013, the President signed 448 federal laws of which 252 were drafted and submitted for approval by the Government. In other words, our work was very productive. Make no mistake; we were committed to drafting well thought out laws throughout the year. Thank you for your cooperation. I hope that we will continue to work effectively on draft laws that have been submitted to the State Duma.

Colleagues, before I start reporting on the Government’s performance and concrete figures, which I will certainly provide, as usual, I’d like to ask for your patience, because this may not be an entertaining matter. Answering questions is always the more interesting and dynamic part, but I’ll provide some figures first.

I’d like to begin with the following. We worked in compliance with policy documents, namely the executive orders which the President signed in May 2012 and the Policy Priorities of the Government. Our cooperation has taken on a special meaning, because 2013 was not a simple year for Russia, given the economic pressure, political factors and unfavourable situation on the global markets that persisted throughout the year. Of course, these negative trends were bound to influence such a large global player as Russia, but I wouldn’t describe that influence as catastrophic. This is a fact. However, global developments highlighted tender spots of our economy and the structural and institutional limitations that have accumulated in our economy over the past decades: primarily insufficient diversification, low investment activity and the quality of our state governance institutions that does not meet modern requirements.

Taken together, this has prevented us from achieving and maintaining high growth rates. But there was one event last year that resulted in a decision of special and even historical significance. It began last year, and on 18 March, two new entities – the Republic of Crimea and the federal city of Sevastopol – became part of the Russian Federation. Russia has reunited with the territories that have always been a spiritual and cultural part of the country despite the decisions taken during the Soviet era and the borders that we inherited from it. These two entities have returned to Russia as the result of an open and honest expression of the Crimeans’ will at a referendum that was held in accordance with the generally accepted democratic procedures and norms of international law. As many as 96% of referendum participants opted for reuniting with Russia.

This is fresh and convincing proof that people on both sides of the Kerch Strait have always seen the Crimean Peninsula as part of Russia. The incorporation of the new regions into Russia has put the historical record straight.

Dmitry Medvedev: "Our decision on Crimea provoked a dramatic reaction. It was used as grounds for political pressure, including through so-called sanctions. In fact, this is a very complicated situation. Russia is experiencing triple pressure for the first time: global economic instability, which I mentioned before, unfriendly policies of some leading countries, and, of course, internal structural limitations, which I also mentioned."

Our decision on Crimea provoked a dramatic reaction. It was used as grounds for political pressure, including through so-called sanctions. In fact, this is a very complicated situation. Russia is experiencing triple pressure for the first time: global economic instability, which I mentioned before, unfriendly policies of some leading countries, and, of course, internal structural limitations, which I also mentioned. The Government is fully aware of the scale of challenges and related issues. I believe that it would be right to answer all of the related questions at the beginning of my report.

The first question that comes to mind to all Russians and State Duma deputies is whether possible sanctions would affect the Russian economy. I strongly believe that we’ll be able to minimise the consequences of this. The Government is ready to focus on the protection of the economy and the people from unfriendly actions that result from a deteriorated international environment.

I’m aware that almost all State Duma parliamentary groups are wondering whether, given the new global landscape and the situation in the country, the Government should change course economically. What I want to tell you in response is that Government policy is always a well thought out system of action. The President approved this system. I think it would be wrong to change it radically.

Dmitry Medvedev: "Russia can and will take a road of its own in terms of national identity and values, but the laws of economic effectiveness are universal. Faced with this unprecedented challenge, it’s crucial that we calmly stick to the strategy we have chosen."

It would also be wrong to run around and try to come up with new economic development approaches for Russia. Russia can and will take a road of its own in terms of national identity and values, but the laws of economic effectiveness are universal. Faced with this unprecedented challenge, it’s crucial that we calmly stick to the strategy we have chosen.

This, however, does not mean that there will be no adjustments, since the situation was different when we started our work. Furthermore, the current situation should be viewed not only as a challenge, but also as a great opportunity for improving government efficiency and creating a new foundation for the national economy based on domestic production. It’s obvious that we need to take on these opportunities. We have the necessary tools for sustaining growth even in such a harsh environment and despite the attempts to hinder our actions.

Government report on its performance in 2013

The second question is whether the social sector will be affected. I would like to make it clear from the outset that no matter what happens around our country, no matter what economic woes the Russian economy faces, we will fully deliver on all of our social commitments.

Our political views, ideas and perspectives regarding the changes that have taken place in Russia in recent years may vary, but I still think that we must acknowledge the obvious: all our recent efforts were for the benefit of the people and were aimed at improving the quality of life in the country. We are not moving ahead as fast as we wanted. That said, the Government consistently increased salaries, pensions and child allowances every year and provided housing to war veterans. Those who remember how salaries, pensions and benefits were paid before are now few, but this doesn’t mean that we can forget it. Even at the height of the global economic crisis the Government delivered on all of its social commitments. It is for this reason that we do not intend to back down today either.

Not long ago, the demographic situation seemed insurmountable. We saw terrible, apocalyptic scenarios for the country’s future. However, we overcame this crisis; the mortality rate stopped increasing, while the birth rate reached acceptable levels. This is undoubtedly the result of a consistent social policy. There is no way that we can afford to lose the achievements that cost us so much effort. For this reason, our priorities remain unchanged: increasing pensions, public employee salaries, and upgrading education, healthcare and housing programmes. Special attention will be paid to supporting families with two, three and more children. We should also keep students in mind and all those who need our help and protection: orphans, lonely seniors, people with disabilities, i.e. all vulnerable social groups.

The third question concerns whether we will be able to maintain certain industries under restrictions in cooperation with foreign partners and even closure of markets. The domestic industries, some of which are dependent on foreign supplies, will receive the necessary support from the Government. We by no means refuse any cooperation with foreign companies, including western companies, but we must be ready for any unfriendly moves – especially because it has become clear in recent years that we are capable of modernising Russian industries, setting up hi-tech enterprises in both well developed and completely new sectors, all using our own resources.

Dmitry Medvedev: "The domestic industries, some of which are dependent on foreign supplies, will receive the necessary support from the Government. We by no means refuse any cooperation with foreign companies, including western companies, but we must be ready for any unfriendly moves – especially because it has become clear in recent years that we are capable of modernising Russian industries, setting up hi-tech enterprises in both well developed and completely new sectors, all using our own resources."

In response to artificial restrictions in economic ties, we will use additional incentives to reduce dependency on imports. Moreover, we have ambitious goals in certain sectors: to fully meet the demand with domestic production. I would like to stress once again that we have the research, technology and production potential. This has been confirmed by successful projects in defence and chemical industries, in machine engineering, pharmaceuticals and more.

Government report on its performance in 2013

The majority of industry strategies and state programmes already include projects that are meant to replace imports. For those enterprises that could be affected, we are trying to elaborate the best possible support measures. Now this work will go more quickly. This is the main idea behind adjusting our economic policy. Therefore, those questions that I usually hear... For example, our colleagues from the Communist Party would like to know if there could be any difficulties in the machine engineering sector following the political events in Ukraine. I’m sure that by adjusting our state programmes we will be able to determine the best possible ways to support our enterprises.

The fourth question is directly related to the third one. Will our businesses and our entrepreneurs even be affected? In the event of unfriendly actions towards Russia, Russian businesses will receive the necessary support. Let’s be honest: with or without sanctions, our companies must learn to operate in a strong competitive environment. The economy is global. Working in a strong competitive environment and working in the midst of a politically driven economic war are two different things. Competition must be fair, and it is usually a result of objective circumstances rather than political decisions. It is here that the Government is responsible for providing all necessary support to businesses. We will use the resources we have, including those we received through our accession to the WTO. For 17 years, we were basically kept waiting in the lobby, having to prove that we deserve to join the global trading community and that we meet its standards. Now we are fully entitled to request that other WTO members observe the rules regarding Russian goods. And we should not be shy about doing this. This is how I urge my colleagues in the Government to think. If it is reasonable and legitimate, we will have to show our teeth and refer to courts as well as other institutions, including the WTO Dispute Settlement Body. I think it would be right to prepare proposals for potential laws that could protect the interests of Russian businesses violated by illegitimate sanctions. And I rely on the support of my State Duma colleagues here.

We face pressure in other business related areas, specifically from the OCDE. Just recently I spoke at a board meeting of the Ministry for Economic Development and I said that they cannot pressure us just because we are negotiating our membership in this respectable and important organisation. We understand that everything that was done during the preparation stage is important to us ourselves. But we have no intention of intruding ourselves on anyone.

The fifth question. Will our defence and security be affected? No, they will not. The defence industry has always been our national pride. After the difficulties of the past years, the defence industry has finally recovered. We will not allow it to weaken as a result of someone’s unfriendly actions.

Dmitry Medvedev: "Even now, Russia is independent from imports in production of many types of military equipment. No one questions our country’s ability to make modern, quality weapons. Russia confidently holds second place in terms of arms exports."

Even now, Russia is independent from imports in production of many types of military equipment. No one questions our country’s ability to make modern, quality weapons. Russia confidently holds second place in terms of arms exports. We intend to continue to improve our standing on the global arms market not only by strengthening our ties with our traditional partners, such a India and China, but also by developing trade cooperation with new partners in Latin America and by reviving ties with African countries, with which we have good relations of military and technical cooperation. Some sectors of our mechanical engineering industries that depend on cooperation with Ukrainian partners, which I have mentioned, will receive the necessary additional assistance from the Government.

One more question: Will our scientific cooperation with other countries be affected? Actually, all sides are interested in such cooperation, and so we wouldn’t want it to be affected. A country’s leading positions mostly depend on its scientific achievements and their implementation in production. As you probably remember, in the 1990s, our scientists mostly survived on foreign grants. The situation has dramatically changed since then. We have been increasing allocations to research. Russia is a fully-fledged member of the global scientific community and has made intellectual and financial contributions to major international research projects.

I’d like to repeat that science is inherently international; it does not have and cannot have borders. Understandably, our scientists are aware of the benefits of cooperation and have positive experience in participating in joint research projects. In fact, other countries have been trying to recruit or lure over our professionals, especially young scientists. We have developed broad cooperation ties with research centres in other countries, including in the West, and I’d like to emphasise that artificial limitations would have an equally negative effect on all members of scientific and technological integration. Not only we in Russia, but also our partners should take this into account. We hope that common sense, or at least elementary pragmatism, will take the upper hand, primarily in their political quarters, because the scientific communities certainly don’t want to sever ties.

And lastly, the seventh question: Can these potential sanctions affect our people? We will not allow Russian citizens to become hostages to political games. It took the world a long time to globalise, to learn to come to terms on the most important international issues and to develop common rules. Today, some basic values of this globalised world, such as the freedom of movement, have been put in question. We have recently witnessed absurd travel visa limitations on grounds of profession and even gender. It has even come to direct bans on entry.

We have a choice of measures. We can continue to exchange black lists, but I don’t think this audience needs to be told that this is a dead-end solution. Our citizens waited a long time to get the right to the freedom of movement.

Dmitry Medvedev: "A country’s leading positions mostly depend on its scientific achievements and their implementation in production. As you probably remember, in the 1990s, our scientists mostly survived on foreign grants. The situation has dramatically changed since then. We have been increasing allocations to research. Russia is a fully-fledged member of the global scientific community and has made intellectual and financial contributions to major international research projects."

Other limitations have been imported in other areas. Our foreign partners blocked credit card services to some Russian bank customers. It was definitely a violation of our agreements with these card payment systems. I believe that they must not be allowed to go scot-free: We should spend time and money to bring our foreign counteragents to their senses. They cannot justify their action by force majeure circumstances or presidential and parliamentary instructions. They must be called to account within the current framework of economic relations. At the same time, this should serve as an additional impetus to create a national card payment system that would depend on foreign markets as little as possible and would be failsafe across the country. I chaired a meeting on this issue a week ago. I hope for our cooperation towards amending the law on the payment system, which we adopted several years ago, in accordance with the current situation, and towards creating a modern legal framework. Colleagues, I strongly hope for your assistance in this matter.

Government report on its performance in 2013

Colleagues, as we understand, imposing restrictions is a primitive method and a path leading nowhere. But if a number of our western partners do take this path, we’ll have no other choice. We’ll manage on our own and will win in the long run. We have the necessary resources. I would like to note that last year, despite all the problems, we maintained a margin of safety sufficient for avoiding a crisis similar to the one that hit the Euro zone and the EU economies in general.

The results of the year (I am moving on to figures and to last year’s results themselves) were as follows. The economy showed growth, albeit not very substantial. The GDP increased by 1.3%, which is less than we planned (and colleagues from different factions, including the Communist Party and others, are quite right in pointing this out). But we must understand, as economists teach us, that the economy is in a normal state only in Economics textbooks. Life is always richer and more complicated. The majority of macroeconomic and social indicators is stable or demonstrates positive dynamics. We also expect a positive increment in the GDP at a level comparable with EU economic growth rates.

Industrial production growth in 2013 was small – 0.4% – but the first quarter of this year is better, with 1.1% growth. Consumer demand was growing at a rather high rate. Retail trade grew by almost 4% last year and by 3.5% in the first quarter of this year. Paid services to the public increased by 2%.

People’s cash incomes showed decent dynamics, increasing by 3.3%. Actual wages increased by 5.3%. Nominal average monthly pay grew to almost 30,000 roubles, or 12.5% more than in 2012. In March 2014, this pay reached the level of 31,300 roubles.

Dmitry Medvedev: "The 2013 inflation rate was 6.5%, or slightly lower than in 2012. The registered unemployment level likewise declined to 1.3% by comparison with 2012, while general unemployment, as calculated by ILO methods, stood at 5.5%, remaining at approximately the same level as in 2012."

The 2013 inflation rate was 6.5%, or slightly lower than in 2012. The registered unemployment level likewise declined to 1.3% by comparison with 2012, while general unemployment, as calculated by ILO methods, stood at 5.5%, remaining at approximately the same level as in 2012. According to the Federal Service for State Statistics, the same figures were registered in the first quarter of this year. These are definitely good figures and we are pleased with them.

We still have the lowest national debt of all the developed countries, a balanced budget and substantial gold reserves.

But it should be admitted that the macroeconomic indicators are not the only yardstick for measuring the effectiveness of the authorities. Indicators in the social sphere, which are very sensitive and affect the absolute majority of people, are highly important. Moreover, as I said earlier today, they are our absolute priority.

I am particularly pleased to note our achievements in demographic development. We are observing natural population growth, which is something we have fought for over recent years. For the first time in 20 years, or the entire history of modern Russia, the nation's population increased by more than 20,000 people. Let me stress that this happened for the first time in Russia’s modern history.

I’d like to remind you that life spans were shorter by almost five years when we started tackling demographic problems. Men’s life expectancy was simply disastrous – 60 years – whereas now it has reached 71 years.

One of the main things that influenced the natural population increase was the consistent implementation of the policy in the areas I just mentioned, including state support for families with two and three children.

Of course, the construction of new perinatal centres has played a role as well. There are 22 perinatal centres now open, one of them federal. Another federal centre will open by the end of this year. Last year, as you know, the Government approved the Perinatal Centres Network Development Programme until 2016. Within the next three years, 32 centres will be built in 30 regions, which is a significant improvement in neonatal and prenatal care. The regions that have these centres are witnessing a decline in infant and maternal mortality. Generally, the infant mortality rate declined by almost 5% in 2013 in most regions, but not all of them. So the regions (and we) have more work to do here.

Dmitry Medvedev: "Last year, as you know, the Government approved the Perinatal Centres Network Development Programme until 2016. Within the next three years, 32 centres will be built in 30 regions, which is a significant improvement in neonatal and prenatal care. The regions that have these centres are witnessing a decline in infant and maternal mortality. Generally, the infant mortality rate declined by almost 5% in 2013 in most regions, but not all of them."

Another large programme conducted last year, the modernisation of healthcare in the regions, has also contributed to the improvement of the demographic situation. For the past three years, 665 billion roubles were allocated for this purpose. The first results are as follows: over 100 medical facilities were built, 3,500 city and rural outpatient clinics and midwife stations were renovated and received new equipment. We also worked on air lift medical services and organised campaigns where doctors visited people. I will probably talk about this a little more when I answer questions.

Government report on its performance in 2013

I’d like to note that almost a third of regional programme funding was directed at the improvement of medical services for mothers and children. In 2013, a preventive medical examination campaign began; 35 million people (of which 14 million were children) took advantage of this. Starting in 2015, all children will receive an annual medical check-up. We’ll return to the previous standards which proved successful. Special attention should be paid to children in difficult situations.

High-tech medical aid became available to more patients in various regions of Russia, and not only in big cities. A network of specialised medical centres has been established, comprising 122 federal centres and 289 regional ones. As a result, the number of patients receiving high-tech medical services has grown by more than eight times since 2006, when – allow me to remind you – we all discussed a national project to improve healthcare. I think it is a real achievement of Russian medicine over the last few years.

Dmitry Medvedev: "In 2013, a preventive medical examination campaign began; 35 million people (of which 14 million were children) took advantage of this. Starting in 2015, all children will receive an annual medical check-up. We’ll return to the previous standards which proved successful."

I know that many deputies, and particularly members of A Just Russia party, are concerned about how the federal medical centres will be financed in the future and how changes in the possible financing arrangements will affect the quality and availability of their services. It is our concern, too, naturally. But I think there will be no serious problems here. In December, we approved a list of high-tech medical services to be provided, and sources of funding were identified in the federal and regional budgets, as well as in the Federal Mandatory Health Insurance Fund. This year, the federal government will allocate almost 50 billion roubles for providing high-tech services at federal establishments. Regional co-financing is also envisaged. I met with the Minister of Healthcare just before coming here. The number of patients applying for high-tech services has increased (not decreased) by 7,000 over the last two months.

The Government, as well as regional authorities, continues to address the very sensitive issue of kindergarten availability. I would like to thank everyone present for your cooperation and support; I know that this issue is a shared concern of all parties. This has required serious effort. I had to get involved with many things personally to remain in control of the problem. And I must tell you frankly that we have made a real breakthrough with it. There was no period during the Soviet era or since then when facilities were built so fast. In 2013, an additional 50 billion roubles was allocated for this purpose along with other subsidies, and regional governments provided as much as 40 billion roubles. As a result, kindergartens across Russia accepted over 400,000 more children, exceeding the plan; the waiting list was cut by nearly 200,000 children.

Dmitry Medvedev: "In 2013, an additional 50 billion roubles was allocated for this purpose along with other subsidies, and regional governments provided as much as 40 billion roubles. As a result, kindergartens across Russia accepted over 400,000 more children, exceeding the plan; the waiting list was cut by nearly 200,000 children."

This is a good result, but still not good enough. The waiting list is still rather long – nearly 400,000 children. So the Government decided (once again, let me thank the State Duma deputies for their support) to continue financing the construction of kindergartens at the same level, so that new facilities are built as rapidly as they were last year.

Equally important for the country's development is education. In 2013, a three-year programme of modernisation of regional general education systems was completed. The main focus was on improving school life, so that every child could learn using the most modern programmes, and teachers, for their part, could earn reasonable wages.

Nearly 50% of Russian schools underwent routine repairs and 20% were thoroughly renovated. By the way, I would like to say – I hope that we will have the opportunity for this – at the end of the kindergarten construction programme, I believe we must work together to concentrate on the programme on the construction of new schools. And our governors and heads of constituent entities support this. In other words, we must first take care of preschool education and then build new schools – not renovate, I would like to stress, but build. Since the regions themselves will not solve this problem, we have to do it together.

Most schools have upgraded their libraries and educational equipment, including resources necessary for the introduction of new educational standards. About 70,000 children, including those with disabilities, will now be able to study remotely. This has practically solved the problem of transport accessibility of primary educational institutions, something we have also been working on for the past ten years. We focused in particular on supporting rural schools, which, of course, should be as good as urban schools – at least when it comes to the level of technological equipment. In 2013, more than 700,000 teachers advanced their skills.

If terms of money, the amount we have invested in our schools over the past three years – 120 billion roubles from the federal budget and 28 billion roubles from the regional budget – is unprecedented in our country’s history, with modern equipment, computers, proper gyms, assembly halls, medical offices, cafeterias and transportation provided even for schools that had not received anything for decades. And, of course, we need to improve the quality of vocational education. Changes are taking place in this area, too, both in the competitiveness of our universities and in advancing them in the world rankings. In 2013, 15 leading universities were awarded nine billion roubles for this purpose. This year's funding will increase by another 1.5 billion roubles.

Dmitry Medvedev: "In 2013, a three-year programme of modernisation of regional general education systems was completed. The main focus was on improving school life, so that every child could learn using the most modern programmes, and teachers, for their part, could earn reasonable wages. Nearly 50% of Russian schools underwent routine repairs and 20% were thoroughly renovated."

Everything that I talked about in terms of education and health care allows us to systematically transfer to qualitative development of the labour market. The current situation in this area, as I said at the beginning, remains stable, and that's not bad. In fact, unemployment in our country is low compared to the most prosperous European countries, but we must not be complacent here. In the coming years, we may face a shortage of skilled professionals, even though today we have two million job vacancies. This problem requires urgent attention. In 2013, job opportunities for citizens approaching or of retirement age were expanded at the legislative level. Of course, we must ensure active implementation of laws in practice, and we must do so in close coordination with the task of improving the mobility of working age citizens. This is clear, because Russia is a large country, and the employment situation within it varies. We need to ensure that all the conditions are in place such that those who are ready to relocate and work in other places actually have such opportunities upon moving to another region.

Millions of people are concerned about a pay increase for public sector workers. We understand perfectly well that this issue determines not only the well-being of the workers and their families, but also the social well-being of almost all people in Russia.

Answering a question from A Just Russia (also asked by other parliamentary parties), I’d like to say that in 2013, in all regions, we managed to increase wages of medical personnel. The wages of school teachers were increased in all regions except three. This year, this work will continue in accordance with the road map approved by the Government.

Colleagues, last year we worked on modernising the pension system. According to the new formula, three factors will influence pension savings: wage, pensionable service and age. The new system will encourage people to retire late and work after they reach the retirement age. This is for those who want that, of course.

As before, there are discussions about whether it is necessary to raise the retirement age. I have received similar questions, we can discuss them in detail, but I don’t think we should go down this road. By increasing the mandatory insurance period to 15 years, we will encourage employment transparency, because people will be interested in transforming informal employment relations into official labour contracts with all the ensuing social benefits, payments and guarantees, all of which are stipulated in the current legislation.

Dmitry Medvedev: "Never before in post-Soviet history did we build so much housing as we did last year. According to the statistics service, we built 70.5 million square metres of housing. At the beginning of 2014, we adopted the documents necessary for launching the Housing for the Russian Family programme. At least 25 million square metres of economy-class housing plus social and utility infrastructure are to be built in several regions by the end of 2017."

All of you remember the difficulties that the package of laws on the pension system encountered. Speaking plainly and openly, such laws were not accepted enthusiastically in any country, because legislators are concerned about the interests of retirees. This is as it should be, because such laws are never approved without problems and compromises. It was our first pension law that, I believe, stipulates high standards of justice, and we managed to adopt it. I’d like to thank all State Duma deputies for supporting the Government.

It's not only pensioners who need better social protection. This is why we have decided to adopt a special legislation. I’d like to draw your attention to the law on the fundamentals of social services. Its history was anything but simple, but we hope that it will introduce fundamentally new principles of social protection of vulnerable groups of the population, including veterans. I’d like to add that we must complete the veteran programmes that we adopted a while ago, including the housing programme for veterans, which was launched in 2008.

Never before in post-Soviet history did we build so much housing as we did last year. According to the statistics service, we built 70.5 million square metres of housing. At the beginning of 2014, we adopted the documents necessary for launching the Housing for the Russian Family programme. At least 25 million square metres of economy-class housing plus social and utility infrastructure are to be built in several regions by the end of 2017. As a result, 460,000 families will have improved their living conditions. We are also working to simplify monitoring and licensing procedures. I hope that we will cut their number substantially in the near future.

The housing and utilities sector is likely the most problem-ridden sector in the country. Everyone agrees that we must modernise it, but where can we get the money for this project? I know, in fact I’m almost certain, that everyone in this audience understands that this challenge cannot be addressed solely through budgetary allocations, considering the huge size of the necessary investment. Colleagues, our efforts were crowned with the adoption of several serious laws that are designed to overhaul the housing and utilities sector and to create favourable conditions for attracting investment. We have prepared legal documents on transitioning to long-term price regulation, which formalise the mutual responsibility of the parties involved. Suppliers will be responsible for the quality of resources, while the government agencies will be in charge of stable and lasting pricing decisions. At the same time, we will introduce limits on the growth of the total sum of utility fees starting from 1 July 2014. They will be limited by an index approved for a long term, with due regard for inflation.

Many deputies are concerned about the management of residential blocks, an issue that we have thoroughly analysed. I have discussed this more than once with United Russia activists and other parliamentary parties. People complain about the inadequate operation of housing inspection services. I’d like to say, though, that these organisations do not have the power to inspect housing management companies before they appear on the market. Also, there are no legal mechanisms for stopping the operation of unscrupulous management companies. Meanwhile, the number of lawsuits filed against these companies keeps growing by nearly 20% a year. This means that something is amiss in this sphere, and we must do our best to upgrade the housing management service.

The introduction of licences for the operation of such companies would resolve many problems. However, this new procedure must not increase utility fees. Spending on this procedure will be limited to the cost of the stamp duty for the issue of the licence. Moreover, we must approve fines for the top manager of such companies rather than the company as a legal entity. A draft law to this effect has been sent to the Duma. I know that you plan to hear it shortly, later today. But we are continuing to discuss this law, because it is very complicated. To be honest, the wording you will eventually adopt will not be ideal. But this is what we – the executive and legislative branches – are for. We must quickly find our bearings and take the necessary decisions. As Prime Minister, I certainly have to speak about the key domestic industries and how they fare, since they help shape Russia’s reputation.

The fuel and energy sector accounts for a great part of Russia’s economy. It has become a habit of late to criticise the fuel industries, but on the other hand, I think we must value this important source of income more. Russia is often criticised for being overly dependent on hydrocarbon exports. However, I would still like to note that natural gas production grew 2% in 2013, to 668 billion cubic metres.

More Russian regions are being connected to gas distribution systems, which is a very important programme, I must say. I am very proud of having launched it some time ago. On average, two-thirds of the Russian territory is already connected; in rural areas, the figure is 54%. Let me remind you that it was as low as 30% when the propgramme was launched; such was the legacy we inherited from the time when most Soviet republics were 90%-95% connected to gas grids, while Russia had only 30%-40% of its territory covered. We are to finish this project over the next few years. I hope that Gazprom will be strong enough to do this, and that the government programmes initiated to help the regions will also do their part.

Oil production has been on the rise for the last five years. In 2013, Russia produced 523 million metric tonnes of oil and gas condensate (a 1% increase), and most importantly, this growth was brought about by the new East Siberian and Far Eastern oil projects, which showed a 10% rise. In December 2013, the Prirazlomnoye offshore Arctic project produced its first oil.

The oil pipeline network is also being expanded. Transneft approved nearly 2 trillion roubles in investment in February. The money will be channelled to modernise existing pipelines as well as to boost the throughput capacity of the East Siberia-Pacific Ocean system to 800 million tonnes. This is very important given the current situation – I don’t think I have to say any more on the issue.

Dmitry Medvedev: "Oil production has been on the rise for the last five years. In 2013, Russia produced 523 million metric tonnes of oil and gas condensate (a 1% increase), and most importantly, this growth was brought about by the new East Siberian and Far Eastern oil projects, which showed a 10% rise."

Let me also remind you that 2013 was declared the Year of the Environment. We all worked together – the Government and parliament. This resulted in finally taking the very difficult decision to shut down the Baikal pulp and paper mill, which was a major threat to the natural environment in the region. Yet, we managed to compensate for the lost jobs by establishing a recreation zone there, which will create new jobs. I believe that this is the right way to address such issues.

Colleagues, naturally, we have developed the transport system which is very significant for ensuring national unity. We built and reconstructed one-third more federal roads than was initially planned. Last year, it was decided to use the assets of our National Welfare Fund to implement major infrastructure projects, including construction of the Central Ring Road (TsKAD), the modernisation of the Baikal-Amur Mainline (BAM) and the Trans-Siberian Railway. For this purpose, we will invest 150 billion roubles in Russian securities, including Russian Railways and the Federal Road Agency (Rosavtodor) shares, respectively. The Government has clarified the procedure for investing these assets. By the way, our colleagues from the United Russia party asked about this. In all, 150 kilometres of mainline track was built, and the Russian railway system carried over one billion passengers.

Air travel volumes increased by almost 15% throughout 2013. We moved to open new routes that were not linked with our central Moscow transport hub. In all, 80 routes, I repeat, 80 new routes, were initiated, and five subsidy-allocation programmes with a total federal co-funding volume of 7.5 billion roubles implemented. We expect to carry 1.5 million more passengers this year and launch an additional 100 routes. And, of course, we need to create conditions for fair competition in the transport sector, including the establishment of so-called low-cost airlines. I expect the low-cost carrier Dobrolyot to start operating this June. Of course, we will need to assess its future prices.

Dmitry Medvedev: "Air travel volumes increased by almost 15% throughout 2013. We moved to open new routes that were not linked with our central Moscow transport hub. In all, 80 routes, I repeat, 80 new routes, were initiated, and five subsidy-allocation programmes with a total federal co-funding volume of 7.5 billion roubles implemented."

Government report on its performance in 2013

Increasing air travel demand goes hand in hand with efforts to upgrade the air fleet. Our colleagues from the Liberal Democratic Party of Russia would like to know why airlines prefer foreign-made aircraft. The answer is obvious: No one prefers anything, but the airlines have to buy about 110-130 aircraft annually and Russian aircraft plants were only able to deliver 12-15 airplanes annually. This situation persisted until the latest aircraft models were unveiled. At the same time, demand for turboprop planes was mostly met through imports. Nevertheless, Russian-made aircraft accounted for almost 17% of new commercial planes last year, and this share will continue to grow. This will happen by building new production facilities and by expanding the production of new types of Russian aircraft.

Recently we celebrated Cosmonautics Day. Russia, which launched the first manned space missions, is traditionally ambitions in this area. We have restructured the aerospace industry, and we have established the United Rocket and Space Corporation. I hope that this corporation will make it possible to meet the demand of the Russian Armed Forces and national space programmes for new technology and equipment.

Russia still leads the way in global space rocket launches. In December 2013, the light Soyuz-2.1V launch vehicle was tested successfully at Plesetsk Cosmodrome. And the Vostochny (Eastern) space centre, now being built, will also be used for these purposes soon.

Over the past few years, the Government used to expand financial support for the national defence industry, and now this investment is starting to pay off. Defence industry output has expanded by 13.5%, and some sectors, including radio-electronics and the aircraft industry, have posted even more impressive results, and up to 25% of their production facilities operate to full capacity. Military product exports have reached $15.74 billion, an all-time high.

The state procurement system has been modernised and has grown in value by 60% compared to 2012. It is true that the Russian armed forces have not received so much new equipment for 25 years. We carried out plans to equip our strategic forces – particularly, equipment for aerospace defence and ballistic missiles. In this respect, the defence of our country is secure. We are eliminating persistent problems in the industry, by which I mean missed deadlines. Now there is financial liability for failure to meet deadlines, a supervision system and a foundation for advanced research.

Dmitry Medvedev: "Over the past few years, the Government used to expand financial support for the national defence industry, and now this investment is starting to pay off. Defence industry output has expanded by 13.5%, and some sectors, including radio-electronics and the aircraft industry, have posted even more impressive results, and up to 25% of their production facilities operate to full capacity. Military product exports have reached $15.74 billion, an all-time high."

I will now speak about the agricultural sector. In this very hall last year, Gennady Zyuganov sarcastically called Deputy Prime Minister Dvorkovich, who is responsible for the agriculture, a descendant of grain farmers, and Minister Fyodorov a lawyer/animal breeder. He expressed doubts that the agricultural industry can achieve any success. But as we can see Mr Zyuganov was wrong about this. The farming industry has demonstrated not just good results but far better results than in previous years. Generally, this success has had a positive influence on the economic growth rate of the country. The growth in agricultural production amounted to 6% in 2013. Now compare this figure with the general growth in agricultural production. The growth rate is five times higher than the GDP growth.

By and large, the agricultural industry has been developing thanks to the support of federal and regional officials. Over the past year, we launched a number of programmes. Last year, we worked under the WTO conditions for the first time. We found support instruments that would be in line with our obligations. Perhaps we will speak about this later. I would like to note that this year we plan to allocate at least as much for agricultural development as last year.

Subsidising interest rates is one of our major issues. Some 75 billion roubles was spent on subsidising loans from the federal budget. As I have repeatedly mentioned, the debt in subsidising investment loans is over 18 billion roubles, and this has to be settled.

Colleagues, we need new technology solutions and an efficient support and commercialisation system. In fact, such system has been developed and we are now carrying out an innovative development strategy until 2020. There are area clusters, technology platforms and development institutions.

Dmitry Medvedev: "Subsidising interest rates is one of our major issues. Some 75 billion roubles was spent on subsidising loans from the federal budget. As I have repeatedly mentioned, the debt in subsidising investment loans is over 18 billion roubles, and this has to be settled."

As much if not more attention must be paid to the academics and science. The Russian Academy of Sciences and the entire academic environment underwent a large-scale reform last year. It was not an easy reform and required extensive discussion, but eventually we managed to find a common solution. Nothing collapsed; on the contrary, the sector continues to develop. There is a new funding system for fundamental and exploratory research through the recently established Russian Scientific Foundation and grant-aids that it provides. Currently, there is a plan to allocate a huge amount of money, 1.4 trillion roubles, under the State Programme for Science and Technology Development Until 2020.

Colleagues, a number of events that took place last year required our closest attention, above all, the flood in the Far East. I would like to say a heartfelt thank you to the residents of the Far East who endured this ordeal, rescuers, volunteers – everybody who had to battle the elements and helped the victims. The outcome is well known. No civilians were killed. The Government provided around 40 billion roubles. The effort to provide all the affected people with housing continues and must be completed by 30 September this year.

There are certain priorities in the development of the Far East. They have been outlined, and basically, they are priorities of our strategic development. The Communist Party celebrates today the birthday of Vladimir Lenin – please accept my congratulations. Lenin said once that Vladivostok is far away but it’s still our city. So to paraphrase him, I would like to say the following. The Far East is far away but it’s our region, therefore, we shouldn’t begrudge the spending of money on it. We are now establishing a number of institutions that will be supporting the region’s development. We are developing a legislative framework and I rely on the support of the parliament members. Right after this meeting today, I’m flying to the Far East where I will hold a government commission meeting.

Last year was also a remarkable year for outstanding sports competitions that Russia hosted. Of course, the University Games in Kazan, as well as the Olympic and Paralympic Games in Sochi were the most outstanding sporting events. The entire country was involved in the preparations. Russia was first in the medal count and our team had fantastic results overall. Of course, these achievements transcend personal victories and medals and are the triumph of our whole nation. Let’s be clear: the Russian people did rally around Sochi Olympics. We haven’t seen such a surge in patriotism in many years, and arguably this is the main outcome of the Games for Russia. For us, this is an opportunity to engage not only in promoting elite sport, but also university and school sport. We will continue these programmes – this is to answer the question by our colleagues from the Liberal Democratic Party. Over the past few years, we’ve spent about 3 billion roubles on purchasing the equipment and tools for general education institutions, and we will continue to expand this programme. Significant funds were allocated on it this year as well.

In addition to sporting events, there will be lots of cultural events in Russia this year. As you may be aware, 2014 is the Year of Culture in Russia. The consolidated budget for culture is growing as well. Perhaps not as much or as fast as we’d like, but it’s up 7.5% over the past few years which has allowed us to focus on the most important programmes. In all, 140 cultural buildings have been renovated and 10 new theatres built. New stages were built at the Mariinsky and Alexandrinsky theatres. In 2015, we plan to complete construction of five modern multifunctional cultural centres. In all, there will be about 50 of them. We have also supported tours of theatres and other cultural events. I hope that these activities will continue with proper state support.

Colleagues, earlier in my report I spoke about the threats to Russia's economic development. To cope with them, we need effective mechanisms that are based both on internal resources and a variety of markets.

Programme-based budgeting is one of the most important things I will talk about today. The 2014-2016 federal budget for the first time ever was drafted for the medium term based on government programmes. Beginning 1 January 2016, Russia’s constituent entities should also start developing and approving three-year programme-based budgets. This raises the question of their being properly balanced, and our colleagues from various State Duma parties often pose this question.

Dmitry Medvedev: "Programme-based budgeting is one of the most important things I will talk about today. The 2014-2016 federal budget for the first time ever was drafted for the medium term based on government programmes. Beginning 1 January 2016, Russia’s constituent entities should also start developing and approving three-year programme-based budgets."

Indeed, 2013 was a difficult year for Russia’s regions. Expenditures increased significantly, and the overall deficit rose to 640 billion roubles. Internal and external borrowing increased. This is a challenging situation. The Government and the regions are looking for the best solution. Several options, including the use of budget loans, are being analysed. Soon I will meet with representatives of the regions to discuss this issue.

Another goal is to provide adequate living conditions for people residing in Crimea and Sevastopol. This work has already begun: relevant commissions are already working, and a Government meeting was for the first time held in Crimea. Importantly, we will create a special federal targeted programme for the development of Crimea before 1 July as part of our decisions.

Another important thing to consider is improving the business environment. This should not be a mere cosmetic improvement – we should fundamentally revise our approaches to improving the business climate. To do so, we will need to amend our legislation, further reduce the administrative burden and, of course, improve the quality of law enforcement. We will do our best so that both Russian and foreign companies that operate in our country continue to believe in Russia and feel that we are ready to provide them with the best possible conditions for doing business.

On a separate note, the Government does not plan to raise taxes. Certain experts called for this and the appropriate departments analysed their proposals, but we will not go ahead with such plans.

We continue to implement the road maps that are part of the National Business Initiative. Eleven road maps have been approved, and we are working on them together with the business community.

My third point is about increased support for local entrepreneurs. As we help them, we should also pay attention to small and medium-sized businesses. We have taken a number of measures before, and I can describe these decisions in more detail. We have changed the registration rules, and the number of small businesses grew rather than declined last year. The contraction has stopped, and the number of registered sole proprietors increased by 12,000.

A differentiated approach to calculating their insurance premiums based on annual income was introduced for sole proprietors on 1 January, 2014. Reduced insurance premiums will apply to small businesses involved in production and social spheres. Small businesses will be able to use simplified accounting.

But even under conditions of rigid budget restrictions we are continuing to provide direct financial support through federal measures. Every year, we allocate subsidies for co-financing and form the necessary infrastructure. Last year, we sent about 20 billion roubles for this purpose and will transfer another 21.5 billion roubles this year.

Today, it is very important to ensure solvent demand, in part by introducing a new contractual system. Starting this year, local and federal Government bodies should order directly from small businesses no less than 15% of their total purchases. We should make absolutely certain that this is done at all levels of Government. Small- and medium-sized companies also have their share of the purchases of natural monopolies and we hope that this will not be below 18%.

Dmitry Medvedev: "Starting this year, local and federal Government bodies should order directly from small businesses no less than 15% of their total purchases."

Accessibility of loans is another issue. We know that the main problem is high interest rates. This is why we should deal with the formation of collateral and the operation of regional warranty funds. In the near future, we will launch a warranty fund with a charter capital of 50 billion roubles. We’ll do this in June, so our task is to establish a national system of warranty funds both at the federal and regional level throughout the country. I hope that this will help alleviate the consequences of various crises and make affordable interest on loans.

We must also carry out our decision on tax breaks for new small companies that are established in the production, scientific, and social spheres. The powers for this will be granted to the regions.

We need modern, effective state machinery that would be oriented toward the needs of the people. This is the fourth point that I’d like to make. Let me note that several years ago I issued the decision to reduce this machinery by 20%. This decision was carried out better in some places than in others. Quite often, this takes place more slowly than we hope. In this context, I suggest considering reducing Government officials by another 10% both at the regional and federal level.

Now that the global market environment is becoming tougher, we must be more open as regards to our citizens and business. Thus, the results of the Government’s activities will be open for discussion by civil society. We have the Open Government and the expert appraisal system. We’ll continue working in this area.

There’s another issue that I’d like to speak about. Russia’s geographical location and historical ties are giving us a unique opportunity to cooperate both with the West and the East. Indeed, the European Union is our most important partner today, and, let me reiterate, we won’t initiate the reduction of our contacts. This is not in our interests – our trade runs into $400 billion. But if our Western partners still make this mistake, I’m sure that intensive work in other markets will allow us to minimise our losses and even receive some gains. In promoting the economic development of the Far East, we must make full use of the potential of the Asia-Pacific Region. We must develop our trade, economic and investment cooperation much faster with our neighbours – China, India and other BRICS and Asia-Pacific countries.

Our relations with Belarus and Kazakhstan will be raised to a new level of integration. The drafting of the treaty on the Eurasian Economic Union is nearing completion. I hope that it will be finally approved and signed by the heads of state in the near future. Also, the Eurasian integration process can soon be joined by Armenia and Kyrgyzstan, which are at the advanced stage of the relevant negotiations.

Dmitry Medvedev: "Our relations with Belarus and Kazakhstan will be raised to a new level of integration. The drafting of the treaty on the Eurasian Economic Union is nearing completion. I hope that it will be finally approved and signed by the heads of state in the near future. Also, the Eurasian integration process can soon be joined by Armenia and Kyrgyzstan, which are at the advanced stage of the relevant negotiations."

Ladies and gentlemen, we have important and complicated work ahead. We’ll have to work now that we are facing both internal and external challenges. However, we shouldn’t be afraid of them but rather we should make use of them to move forward. Let me recall that Mr Stolypin said in his time: “Countries that were hit hard only came back to life when they worked for their recovery with more energy and desire.” This fully applies to our situation. This year, our country has become bigger. This is a unique case. History has given us an exceptional chance – to establish comfortable and decent life in the new regions – Crimea and Sevastopol, while developing all of the other regions, cities and villages of this country. Colleagues, the Government of the Russian Federation relies on your assistance and support – after all, we’re all working to make Russia more successful, wealthier and stronger. Thank you. Maybe I’ve abused it slightly, but such are the laws of the genre. Now I’m ready to answer your questions.

Alexei Ponomaryov (Member of the Communist parliamentary party): Mr Medvedev, in your speeches, you frequently note that private owners are the most cost-effective owners. This opinion is mistaken and incorrect. The success of any enterprise depends on the form of its work organisation, rather than on the form of its property. Collective farms, state farms and agricultural production cooperatives are the best work organisation option for the agro-industrial sector. This is proved by the fact that 12,000 cooperatives have been preserved in Germany. Over the past 20 years, the number of similar Russian farms has decreased more than six times over. Russia’s cattle population has decreased three-fold, and its pig population has decreased two-fold. Moreover, its sheep and poultry populations have decreased three-fold and 1.5-fold, respectively. Livestock-breeding farms have been destroyed, there are no jobs, villages have become depopulated, and 42 million hectares of arable land are weeded. Mr Medvedev, what do you think about reviving collective farms and redeveloping virgin and fallow lands?

Dmitry Medvedev: Thank you very much, Mr Ponomaryov.What can I say? Of course, unlike you, I obviously have a somewhat different opinion of the situation in the agro-industrial sector because I address this issue every week, and because I visit regularly agrarian production facilities. I can say that the Russian agro-industrial sector has expanded considerably over the past 10 years. It should be mentioned for objectivity’s sake that we, of course, face problems. But when my colleagues, including Communist colleagues, tell me about the state of the countryside, I always recall my student years when I used spades and pitchforks to pick potatoes in the Pskov Region. And I also recall empty food shop shelves, as well as the lack of meat, milk and all the rest. So, the question is: What reference points are we using with which to compare the situation? As for collective farms, I agree that major commodity producers should remain, no matter what, and that they are extremely important, but we should not forget about smaller farmers either. As for state support (I have discussed this in my introductory remarks and in my report), its volumes totalled 200 billion roubles last year. This is quite a lot. Moreover, the entire sector posted 6% growth, and the plant-growing sector expanded by 12%. I realise that the situation inside the livestock-breeding sector is worse, this is true, but there can be no livestock-breeding industry without the plant-growing sector, and we have to receive fodder. In effect, we have exceeded specific targets being stipulated by the Food Security Doctrine, as regards grain, sugar, potatoes and vegetable oil. We have never posted such results.

The livestock-breeding industry has so far posted less impressive successes, but I would like to draw your attention to the pig-breeding farm production volumes that you mentioned. In 2013, such production volumes increased by 10%, despite the classical (African) swine fever, which all of us, meaning all countries, have to fight. The poultry-breeding sector expanded production by 5%. We ensure 90% meat-product sufficiency in line with the Food Security Doctrine. In fact, we have never posted such results, not even during the Soviet and post-Soviet period.

Indeed, we have to exert additional efforts to swell the cattle population. The situation with dairy cattle is the most complicated, and this is why we subsidise loan interest rates there. By the way, I would also like to note that we stipulate investment loans for the dairy cattle sector. These loans were borrowed for a period of 15 years, and we completely subsidise their interest rates. At the same time, I would like to note that I have instructed the concerned agencies to eliminate all overdue debts for all investment loans that were borrowed by our major farms – probably including those mentioned by you (that owe debts), although not everything was duly formalised – before the year is out. And these overdue debts total about 18 billion roubles.

This year, we started working in line with the WTO format for the first time, and it should be admitted that untied aid has proved quite effective. In 2013, 70 billion roubles were spent on loan subsidies.

I would like to say that we (speaking of major farms) should not forget that tiny farms meet our demand for a number of crops to a considerable extent. And we should not treat them in a derogatory manner, I mean our farmers. Yes, major farms are important, and they are the primary production facilities in some cases, but small production facilities should also exist. I would like to remind you that it is precisely these farms that grow potatoes, produce milk and also provide up to one-third of all meat products. Therefore, we need to create a well-balanced agro-industrial sector, and, to be honest, I believe that we are accomplishing this objective. I am not ashamed for the present-day Russian countryside.

Sergei Naryshkin: Thank you. Mr Igor Lebedev has the floor.

Igor Lebedev(member of the Liberal Democratic Party of Russia’s parliamentary group): Mr Medvedev, the Liberal Democratic Party, which celebrates its 25th anniversary this year, has always focused on addressing ethnic issues in our country, the existence of which had been denied in the Soviet Union for over 70 years. In particular, it’s been our major objective to protect ethnic Russians, who are the key building block of the Russian state. In recent decades, these issues have also included migration-related problems. Today, just as in the past, when we didn’t have any nationalities policy, we don’t have an effective migration policy either, no matter what the Federal Migration Service has been saying in this regard.

Hundreds of thousands of migrants come to Russia without any visa or entry restrictions, bringing with them crime, narcotics, unemployment and diseases. The Russian people can’t stand this any longer. Riots in Pugachev in the Saratov Region, Arzamas in the Nizhny Novgorod Region, and in Moscow’s Biryulyovo District are on record simply because they received a lot of publicity in the media, while many more have gone unreported... We don’t need these migrants either from the political, or the economic point of view.

Sergei Naryshkin: Please add 15 seconds. Colleagues, please stay within the one minute time limit to ask a question.

Igor Lebedev: We have neither political nor economic need for these migrants, and in social terms they are outright dangerous. How is the Government planning to address this problem to ensure that similar riots do not happen in the future?

Dmitry Medvedev: Mr Lebedev, the problem you have raised does exist. Migration-related issues have been in the focus of the Government’s attention, just as they have been in the focus of the State Duma and all political forces in Russia. In fact, with the assistance of the State Duma we recently adopted a number of very important laws aimed at regulating the situation in the area of migration. Specifically, we have reduced the period of stay in Russia to 90 days out of six months (in the absence of other grounds), and have toughened the work permit requirements for migrants.

With regard to the Federal Migration Service, things are not perfect there either, but I would like to remind you that last year alone the agency’s regional bodies uncovered close to 800,000 administrative offences in the migration sphere and initiated about 800 criminal proceedings. What this means is that the Government, albeit slowly, has been taking the situation in this area under strict control. Furthermore, as of this April, the FMS has refused entry to Russia to 600,000 foreigners. This is a very significant figure. Our partners from other countries have been asking us to revise this decision, but we have taken a firm stand on this issue.

To be honest, however, the FMS can’t deal with these issues alone. Employers, business owners, and those residents who provide accommodation to migrants also have an important role to play in helping to address this problem. The Government needs to regulate their activity as well.

Our residents are legitimately concerned with and even alarmed by many migration-related problems, but we also have to admit that it is not only highly qualified specialists that we need in Russia. We do need innovators, but let’s be honest, we also need street cleaners. Just as in many other countries, few people in Russia want to be street cleaners.

The standard of living has improved in this country, and our people are not interested in unskilled work. Therefore, we need unskilled foreigners for these kinds of jobs. But they should be adapted to life in Russia, meaning they should speak Russian, adhere to our customs and traditions, and not try to impose their customs on the locals. Ensuring this should be the task of the FMS and other government agencies. I am sure that we will continue working with the State Duma to improve migration legislation.

Sergei Naryshkin: Thank you. Ms Shvetsova, please go ahead.

Lyudmila Shvetsova: Mr Medvedev, ironically, the number of schools for children with special needs tends to decline. The number of inclusive schools is up, and the distance education is also becoming a reality in Russia. There are only 1,728 such schools in Russia, and their number is down by 218 since 2000. Last year, 29 such school were shut down. Not a single school for children with special needs opened in 2013, although the construction of such buildings was completed. Even schools for the visually and hearing impaired children, as well as children with musculoskeletal system disorders, which we don’t have enough to begin with, are being shut down. Such schools in rural areas are few and far between.

I'm asking you as someone who does a lot under the programme for people with disabilities to share with us what the Government is doing to ensure that all three sectors - inclusive, special, and distance - are evenly represented in our children's education? Thank you.

Dmitry Medvedev: Thank you, Ms Shvetsova. First, I share your concern about the declining number of special schools in general. The total number of students at such schools remains unchanged, though. I checked the numbers: the number of special schools was down by 70-80 over the past three or four years, but the number of students has remained the same, meaning that the reorganisation is still underway, since not all of them are adequately equipped. However, it’s imperative to keep an eye on their total number, as well, I agree.

My second point is that, of course, we need to promote all three areas. Frankly, we haven’t heard much about inclusive education until recently. A visit to one of Moscow’s inclusive schools stands out in my memory. This was the first time I saw regular students and children with special needs share the same school building. This is a totally different environment. It's just another level of kindness, because we know that children can be tough in their relations with the peers, but when they are together, they begin to empathise with them. They begin to understand that children with special needs aren’t any different, but they just have health issues. I think that we’ve made a step forward in this sense when we began developing an inclusive education system in Moscow and other urban areas. It should not, of course, replace special education, because not all children with disabilities can go to an inclusive school, but it’s imperative that we develop this area of education, and it will be supported through public funding.

With regard to distance learning, it is very important for everyone: grown-ups and children, healthy and with health issues. Of course, we will make additional investments in the digital distance learning technology.

To recap, it’s imperative to, first, keep an eye on the number of special schools and, second, focus on rural areas in this regard. Most importantly, the number of children who go to such schools should not decline. We will need to find a balance here. Thank you.

Sergei Naryshkin: Thank you. Over to Mr Yemelyanov.

MikhailYemelyanov(StateDumadeputy): Mr Medvedev, in connection with the ambitious plans to provide budgetary financing to the new constituent entities of the Russian Federation, some of our constituents are concerned that other regions may thus get the short end of the stick. Could you please competently dispel these fears?

With your permission, I’d like to bring up another issue related to Sevastopol and Crimea. The Crimean legislation is now being brought in accordance with the Russian legislation. It is a perfectly right thing to do, but we came to know that Crimea has a number of rules and legal regulations that are not part of the Russian legislation, but which are highly effective. I’m not sure if you are aware of it, but real estate titles in Crimea are issued in a matter of one day. It’s an unattainable dream in Russia because of our bureaucracy. The law On the Children of War has been in force in Crimea for a long time now. Educators titled as People’s Teachers and Honoured Teachers are paid allowances in addition to their regular pay, and so on. Can we make this a two-way rather than a one-way street? Thank you.

Dmitry Medvedev: Thank you, Mr Yemelyanov. First, all the good things that really work in Crimea and Sevastopol should be put to good use. There are no reasons for us to puff up and say that Russia is cool, powerful, and more advanced just because we had more money in recent years. Perhaps, there are things that we can use in the rest of Russia. Still, when we evaluate a particular administrative procedure, we must be realistic about its outcome. Speaking about issuing real estate titles in Crimea, we should keep in mind numerous violations, squatting and other problems that arose in Crimea over the years that is was under Ukraine’s jurisdiction. Thus, prompt issuing of titles is certainly a good thing, but a clean title is no less important, so as to avoid avalanches of legal claims and people fighting each over titles. However, we will look at how things are done in Crimea, and if their titling procedures are fit for using across Russia, we will do so.

You mentioned allowances and other forms of benefits. When my colleagues and I visited Crimea to hold a Government meeting, I said something that I believe reflects our position as a nation. Each and every individual who resides in Crimea and is entitled to benefits which are not paid in Russia, should keep their entitlements in one form or another. No one should lose anything from Crimea joining Russia. Moreover, we may continue using the ideas that have been implemented in Crimea with the understanding that we will be monetising the benefits that are currently being paid in kind the way we did it in our country earlier.

Finally, with regard to your first point. Of course, Crimea and Sevastopol are a source of great joy for us and represent new opportunities for bringing prosperity to our country. However, under no circumstances should the Crimean economy grow at the expense of other regions. That would entirely defeat the purpose of those great decisions that were taken earlier this year. We discussed this issue with the President yesterday, and it’s the subject of our ongoing discussions with our colleagues. We will find additional sources of funding for growing Crimea’s and Sevastopol’s economies, and no region would suffer from it in any way. Everyone stands only to gain from this.

Sergei Naryshkin: Thank you. Mr Lazarev, please go ahead.

Konstantin Lazarev (member of the Communist Party parliamentary group): Mr Medvedev, since the start of this year you’ve lowered the rouble exchange rate to the dollar and euro by about 10%. Considering that exports account for most of the consumer market, prices are bound to go up. Since 1991 the outflow of capital has run into the billions, including while you were President. Obviously, production of goods in our country is a losing business. Under the circumstances we cannot talk about replacing imports. I have a question in this context: what measures do you plan to take to curb inflation? Are you going to prevent the flow of money out of the country, return state currency reserves and stop borrowings in the external market?

Dmitry Medvedev: Thank you, Mr Lazarev.

You started by saying that I lowered the rouble exchange rate but I didn’t lower anything. The rouble exchange rate is shaped by the market and is actually free. The Central Bank can only exert indirect influence on the exchange rate on behalf of the state. Such is the world’s practice, and we’re walking the same path. If we had fixed the rouble exchange rate, we’d have had a different economy that some countries practice, including those that are close to us. In this case we’d have had two, three or four exchange rates, one of which would have been genuine, that is, shaped by the market, whereas all others would have been a far cry from the real economic situation.

You’re right in saying that the outflow of capital is continuing, although there were periods when it slowed down. We should clearly understand what this is. Capital flows out for different reasons. One reason is that money is looking for more attractive markets, and this should give us food for thought: why are our conditions not appealing and what restrictions do we have in our market? However, part of the outflow is due to the withdrawal of capital that has a specific origin, and we must simply be sure to keep an eye on it.

According to the available statistics, in 2012 and 2013 grey capital, which we cannot consider legal, accounted for a large portion of the outflow: 20%, 30% and even 40%. This should compel government agencies to deal with the origin of this capital on the one hand, and on the other hand, introduce norms to attract investment and allow our companies to leave their money in the Russian Federation.

You’ve mentioned inflation. On the whole, it is under control. We’ve achieved fairly good results by using the method of inflation targeting in the past few years. As you’ve quite rightly noted, we should keep an eye on the inflation parameters. Curbing tariffs of natural monopolies is a major component of anti-inflation regulation. We’ve made a decision to this effect. I must say it didn’t come easy. Infrastructure monopolies were worried that they would sustain losses and hoped we’d even help them to a certain extent. Yet we decided on zero adjustment for inflation for industrial enterprises. According to the Ministry of Economic Development, we’ll gain 150 billion roubles from this measure alone. In addition, we’ve limited gas, electricity and heat fees to 70% of previous inflation, and this measure also helps curb inflation.

Finally, we must implement a package of measures on transferring our companies to our jurisdiction. Deoffshorisation of Russian economic activities was suggested by the President and, I think, supported by everyone, including entrepreneurs. All these measures will improve our financial system.

Finally, the last point I’d like to make. You’ve mentioned in passing gold and currency reserves kept in foreign currencies. This was indeed the case during my Presidency and in other periods. I believe that regrettably such decisions have no optimum alternatives. This is the way things are done in the financial world. I’ve been thinking about this all the time and pondered it when I went to G8 and G20 summits. It would be great to place this money into something else, but what? Even our friends and partners from the People’s Republic of China, who have much bigger gold and currency reserves than even we do, also keep their money in securities in dollars and euros. Naturally, we have to deal with all the consequences of the events in the US and European economies, but this is how global finances are arranged.

In the future, we should establish a system with a better currency balance (although this doesn’t depend only on us, of course). I’m referring to a system that is based on many reserve currencies, in which money is accumulated not only in dollars and euros but in other currencies as well. All key economic players should come to terms on this. If we build such a financial system, the Bretton-Woods accords that were reached after WWII would cease to exist. In this way we'd receive a more fair financial system and an opportunity to put our gold and currency reserves into other currencies. It goes without saying that we should also try to make the rouble a reserve currency. To achieve this we should transfer trade to roubles, including in the sale of raw materials.

Sergei Naryshkin: Thank you. Ms Belykh, go ahead please.

Irina Belykh (member of the United Russia parliamentary group): Thank you, Mr Naryshkin. Mr Medvedev, even before the events in Ukraine, our country was seriously involved with the defence of the rights of Russian speakers who find themselves outside Russia. Today millions of people, especially in the east of Ukraine, are in a difficult position, in part because of a ban on the Russian language.

This region is inhabited by many Russian language professionals that are highly skilled in different spheres of the national economy. You spoke about the importance of this subject in your report. However, integration and adaptation of guest workers arriving in Russia requires a package of measures that includes job placement, accommodation and medical and social services. Do you plan to amend or increase the funding of the State Programme to Assist Voluntary Resettlement of Compatriots Living Abroad to the Russian Federation? Thank you.

Dmitry Medvedev: Thank you very much, Ms Belykh. In a word, the answer is yes. Of course, we are planning to do this. Much will depend on our actual financial capabilities, but we consider this programme to be one of the most important for attracting our compatriots to this country.

Incidentally, I’d like to thank the State Duma deputies who voted for the relevant draft law that provides for simplified procedures for the adaptation of our compatriots. It makes it easier for them to obtain a residence permit, skipping the temporary residence permit, and to become citizens if they have Russian roots, if they or their predecessors come from the Soviet Union or the Russian Empire. This draft has been adopted and signed by the President. I think this is a very important document that will help us attract our compatriots to our country. We’ll try to expand this programme and also support of the Russian language, depending on economic opportunities. As soon as they appear, we’ll use them to allocate more funds to this programme.

Sergei Naryshkin: Thank you. Mr Didenko, go ahead please.

Alexei Didenko (first deputy head of the Liberal Democratic Party parliamentary group): Mr Medvedev, it is no secret that Russia and Europe depend on each other in energy.

However, recently Russia has increasingly faced threats to stop buying Russian gas and switch to alternative energy sources or suppliers. Although we understand that such statements are sooner emotional than practical, Russia should rid itself once and for all of such changes in the Western mood. Our parliamentary party suggests that the Government should adopt a clear-cut plan on diversifying our energy customers, primarily with regard to our Eastern partners. The laws of logic and economics demonstrate that this is the way to go. What do you think about our proposal to sell gas from the Russian-Ukrainian border, thereby shifting the responsibility and the dubious pleasure of dealing with Ukraine to our European partners, all the more so as the newly-proclaimed Ukrainian Government can be well described by one Russian word?

Dmitry Medvedev: What word? I haven’t heard any.

Sergei Naryshkin: Add 15 seconds.

Alexei Didenko: There is a good Russian word that reflects the gist of modern European values.

Dmitry Medvedev: What is this word? Can it be pronounced in this hall? No? Okay, although this hall has heard a lot. Okay. Thank you, Mr Didenko. Of course, you’ve touched on a very sensitive issue that the Government and Gazprom are continuously dealing with. I spoke about my ideas on our gas and oil supplies to different markets in the end of my speech. I’d like to confirm again that our trade with Europe is good, we have fully-fledged contracts with Europe but we are interested in diversifying supplies, and now more than ever before. Therefore, we are carrying out all of our decisions on gas and oil supplies to the countries of the Asia-Pacific Region, primarily China and Japan, and we consider this a big gain for our country.

But the issue of price is very important here as well as on any other economic subject. You suggested we should decide this once and for all. But let us abstain from making decisions once and for all, because considerations of advantage are very important in trade. I think if our gas is bought in Europe, China and other places, we should do everything we can to sell them there – both in Europe and Asia. We must invest in our pipeline capacities for this purpose.

As for our Ukrainian partners, we do have problems with them and you’re absolutely right in this respect. These problems have not emerged today and, unfortunately, practically all Ukrainian leaders, no matter what president or prime minister, have continued one and the same line towards using Russian gas illegally (I’ve heard someone yell the right thing – quite often this is direct theft, pure and simple) and trying not to pay for it. The same line is pursued today. The names of Ukrainian leaders are changing fast like in a kaleidoscope, but their policy remains the same: they’ll wait; we’ll pay later; we’ll come to terms with them; we’ll involve Europeans and who knows what else… Now Americans have come out with their new gas. This is all a pure bluff. The fact is that the debt is already $2.2 billion and keeps growing. In all probability, if our partners do not start paying the Russian Federation and the main gas supplier in the near future, we’ll have to switch to advance payments. In other words, we’ll supply Ukrainians with gas only for what they have paid in advance – gas against money. This will be a tough decision but I consider it absolutely fair.

In this context our task is to truly diversify gas supplies and make our partners pay their debts. As for the proposal on border payments, using a different principle, we can analyse this option as well, but let me recall that the gas market operates on the take-or-pay principle on contracted gas, and long-term contracts are the basis of our gas cooperation with Europe. They are valuable because they fix terms of supplies for a long period and we aren’t interested in breaking them. To the contrary, we want them to be fulfilled.

Sergei Naryshkin: Thank you. Mr Dmitry Gorovtsov, please.

DmitryGorovtsov (member of the A Just Russia party parliamentary group): Thank you very much, Mr Naryshkin. Mr Medvedev, There is a lot of discussion regarding corruption in the country, yet people believe that the problem not just remains unsolved, but it is acquiring a nationwide dimension. Just recall sideline costs during the APEC Summit and Olympics preparations. Apart from that, following the decision of the Federal Customs Service of summer 2013, haulers can only go through the customs after they pay a fanciful additional fee collected by six companies selected by the Customs Service. We argued the legality of such fees in a special address by two Committees of the State Duma to the Government. In this respect, Mr Medvedev, what is the Government doing to counter corruption? And second, we would like to ask you, Mr Medvedev, to personally follow up on the illegal fees haulers are charged. Thank you.

Dmitry Medvedev: I see. Mr Gorovtsov, fighting corruption is our common priority, the priority of the executive bodies and the legislature. Let me remind you that we adopted the national strategy back in 2010 and are now progressing in accordance with that document. With the help from the State Duma under the President’s initiative a whole range of documents have been adopted that, in my opinion, testify to our genuine commitment to tackling this problem. In some areas there are positive results while in others the results are not as impressive as we would like them to be. You have mentioned the Olympics, the APEC Summit, but you know, you need proof to back up these allegations. There are a lot of rumours, but rumours do not give grounds for taking someone to account. Anyway, nobody has provided any materials proving large-scale abuses so far. But criminal investigations have been launched, and they need to be completed. In this sense the Government will also take an uncompromising stand, whoever of whatever projects might be involved, even if those projects are important for the country’s image.

As to various fees at the border and hauling, I will instruct my colleagues to look into this problem, as it should be resolved within the context of the preparation of the Eurasian Economic Union treaty with our partners.

Sergei Naryshkin: Thank you. Mr Alexei Korniyenko, please.

AlexeiKorniyenko (member of the Communist Party parliamentary group): Mr Medvedev, public opinion surveys show that 80% of Russians do not want to eat genetically modified food. At the same time, according to Agriculture Ministry employees, one of the largest US corporations producing GMOs, has purchased a considerable part of agricultural lands in Russia through shell companies, and those lands are being sown with transgenic seeds. The sale of these seeds yields 300% profit. My question is: what was your reasoning when you signed Government Resolution No. 839, which allowed for sowing fields with genetically modified seeds? In this context, how should we understand your declaration at the convention of rural deputies, quote: “We have no plans to develop production of genetically modified products or import them to our country.” Will the aforementioned resolution be scrapped? And Mr Medvedev, where is the glass of wholesome natural milk you promised to every Russian schoolchild? Thank you.

Dmitry Medvedev: As tomilk, it was not really a promise on my part, although it is a good idea and we should follow up on it.

Now concerning your question, Mr Korniyenko. As I understand, it has to do with genetically modified food and seeds. This is a complicated matter.

Let me say straight away: the Government of the Russian Federation is not a supporter of GM materials for foodstuffs. The Resolution No. 839, which you mentioned, does not prescribe that this kind of seeds should be used for crop cultivation. It has to do with a system for certifying genetically modified materials, and it was indeed adopted as a result of the complex process of Russia’s accession to the WTO. Nevertheless, I propose that the resolution be amended, not because it is wrong but because the deadlines in it appear too optimistic to meet. Why? I am sure everyone here understands the reasons. As a result of illegal shipments, genetically modified products have already entered the territory of our country and are used in agriculture. However, today we do not have good laboratories that could identify those GMOs, and this is a crucial task. This is the reason the resolution you spoke about will be amended, and we will give three years for such a certification. We simply are not ready for it now. But even if the certification process is approved in three years, in some time, it will not mean that we allow the use of GMOs. This is what I said at the congress of agricultural communities. We are capable of feeding Russia without using GMOs. But to do it, we have to understand how genetically modified materials are different from others. You know how things are done around the world: the Americans have allowed everything, and all sorts of things are grown there, the Europeans remain cautious, saying like it can be done in some cases, whereas we have not allowed anything yet. But the problem is that GMOs are omnipresent, and we just have to understand where they are being used and under what principles, and this is a job for the laboratories. This is where we are planning to allocate funds now.

To conclude on the subject of genetically modified materials: we do not know for certain if it is an absolute evil or if it does not entail any great problems. For that reason we have to wait and see what happens in the coming years. Meanwhile Russia can feed itself without GM food, and I hope we share this stance.

Sergei Naryshkin: Thank you, Mr Medvedev. Briefly going back to the previous question from Mr Gorovtsov regarding hauler fees at the border. As far as I have been told, Mr Shuvalov held a Government meeting and issued some instructions, proper instructions. Isn’t that so, Mr Gorovtsov? Yet they have not been completely fulfilled. I would like to see this process taken to its logical conclusion.

Dmitry Medvedev: Then we can give the floor to Mr Shuvalov.

Sergei Naryshkin: No, that’s enough. Thank you. Mr Nilov, please.

Yaroslav Nilov(deputy head of the Liberal Democratic Party parliamentary group): Mr Medvedev, a short while ago the Liberal Democratic Party had a campaign train travelling through Russia’s remote regions, stopping at small stations and talking to voters. The general impression of what we saw: unfortunately, the standard of living is very low. Poverty, decay, bleakness, neglect and social vulnerability. The reason for all that is lack of funds the Federal Government channels to the regions. Moreover, people worry about the remaining terrorist threat – remember Volgograd. And what do the people see? They see cash flows to the North Caucasus republics whereas terrorist attacks remain and blood is spilt. Maybe it is time to adjust the Government’s subsidies policy, as you said? Let us take a look: the Smolensk Region, the Kaliningrad Region, the Arkhangelsk Region, and compare them to our southern republics... There is a grave imbalance and injustice. The position of the Liberal Democratic Party has always been as follows: ethnic and religious factors should never be a priority when deciding the subsidies issue. Thank you.

Dmitry Medvedev: Thank you, Mr Nilov. First of all, I totally agree with you: the ethnic and religious factors should never be a priority when subsidies are allocated. The priority is a different matter. The priority is the actual level of the regions’ prosperity. There are poor regions in Central Russia, there are poor regions in the Caucasus, and there are poor regions in the Far East. That’s where our attention should go. Yet a great deal depends on the regions themselves. You mentioned the Smolensk Region. They have a new Governor, you know him, and life is improving there. Do you agree with this? That’s all, thank you.

Sergei Naryshkin: Thank you. Ms Shaidenko, you have the floor.

Nadezhda Shaidenko (Member of the United Russia parliamentary party): Mr Medvedev, please excuse me, but I would like to ask a question about the Unified State Exam once again. Yesterday the 2014 graduates wrote their first exam ahead of schedule. But parents, teachers and children are still worried about problems with the 2013 exam. All of us remember online materials used by graduates taking the exam, and we can talk about the questionable behaviour of certain regional officials. So, here is the first part of my question: What has been done this year in order to ensure maximum possible protection of control and evaluation materials? And we realise that renewed trust in the Unified State Exam is a form of creating a joint national education system for children from all regions.

Here is the next part of my question. A new region, Crimea, has been incorporated into Russia, and this region has a lot of school students. Theoretically, we know that they can take this exam or not …

Sergei Naryshkin: Please add 15 seconds. Make it quick, please.

Nadezhda Shaidenko: The question is: How can Crimean school students wishing to take the 2014 exam do this?

Dmitry Medvedev: Thank you very much, Ms Shaidenko. What can I say? The Unified State Exam is a complicated issue, but nevertheless we have failed to invent anything better because the entire world uses this approach. And, as an experienced person who knows the situation, you also understand this. But this doesn’t mean that we must think that we have invented the ultimate remedy. We should improve the Unified State Exam, and actually the Ministry of Education and Science has been looking into this issue since early 2014. To the best of my knowledge, a number of decisions were made in order to ensure more effective preparations for the exam and to make it less vulnerable. However, I don’t claim that this information is exclusive.

Recently, I signed a Government resolution on using video cameras to monitor the exam process. New regulations concerning the actions of officials who organise and monitor the exam have been passed. These regulations cover the use of mobile phones and other gadgets and aim to prevent cheating. We have reduced the number of provisions in order to more effectively monitor the actions of officials organising the exam. And we are introducing a regulation which states expressly that the Unified State Exam or the proposed tests, to be more exact, will be differentiated in line with time zones, so that the answers to some tests cannot be used by students in other time zones. I believe that all these actions will influence the situation with the Unified State Exam.

But, to be honest, students and their parents should also assume some responsibility. You know, other countries also have tests similar to the Unified State Exam, but for some reason no one cheats there. You see, people there understand that it is they, rather than the officials in charge or their fathers and mothers, who need this knowledge. Therefore, on one hand, we should address obvious problems, and on the other we should call on the integrity our school students. This concerns their future, and they should take the best advantage of their opportunities.

As for Crimea, this region, as you know, will be run under the old regulations throughout 2014. But those wishing to take the Unified State Exam and to enroll at Russian or other universities will be able to do so. As far as I know, they will be able to take this exam at four locations, in the four main cities of the Republic of Crimea, from 7 July. I am confident that those children who have studied well will be able to pass the exam. Naturally, the Republic of Crimea and Sevastopol will be under the common regulations next year.

Sergei Naryshkin: Thank you. Ms Petukhova, you have the floor.

Natalia Petukhova (Member of the A Just Russia parliamentary party): Mr Medvedev, the new pension law will be enacted in 2015, and the pension system will become more complicated, less transparent and even unfair. For example, the rights of retired persons who continue working will be infringed upon. Moreover, the retirement age will increase and pension accumulation plans will be maintained. In this connection, many people are contacting the Pension Fund and requesting that part of their pension savings be transferred to pension accumulation accounts. We’ ve estimated that, despite the chronic Pension Fund deficit, about 300-400 billion roubles will be permanently removed from the pension system throughout 2015. Mr Medvedev, I’d like to ask the following question: Don’t you think that it would be reasonable and correct to eliminate pension accumulation plans from the state pension system? Thank you.

Dmitry Medvedev: I see. Thank you, Ms Petukhova.It appears that my impressions and expectations of the decisions that have been made are somewhat different. I hope that an optimistic scenario will prove to be more justified. I don’t think that the system which we are now trying to introduce is unfair, complicated or nontransparent, and that this system will increase the pension age. It has none of these features. But of course there are no ideal systems, and I spoke about this in my speech. We’ll address any arising problems, we’ll hold consultations, and we’re counting on your expert assistance and support at the State Duma.

Speaking of pension age increase, I can discuss this issue once again, if need be, if it didn’t sound very convincing at first. We’re not increasing anything. Why are we increasing? Why are we using this figure of speech all the time? People should work as long as they want to. If they don’t want to work, and if they want to work in their vegetable garden, then they are free to do this at the age of 55 or 60, and nothing changes here. But, on the other hand, we should create incentives for building long-term careers because this eventually increases the average life expectancy. This is why we are introducing this system of incentives. To my mind, this is a merit of the new system, rather than a drawback. And all the rest … We’ll live, and we’ll see how this system works. Indeed, we’re currently focusing on accession to the system of guarantees and the way our private pension funds are preparing for this. Certainly, part of them will join this system, and some will not. It is therefore obvious that all their accumulated savings will essentially be transferred into the solidary system and will be used in line with regulations being approved by the state and the Pension Fund. In this sense, we would essentially scrap the pension accumulation system. But, as you know, the pension accumulation system and pension savings are supported by many people. Therefore I believe that our decision to preserve both, with due consideration for pension legislation amendments, is quite justified.

But, on the other hand, (I hope that you’ll not deny this), the solidary system and the insurance system are starting to play a more important role in the new pension system. In this sense, we’re creating better, rather than worse, guarantees for Russian citizens. But I would like to say once again that we’ll live, and we’ll see how the new system works. We are now preparing to introduce this system. Again, we’re addressing the system of guarantees, and people are studying the pension formula. Naturally, we’ll modify our own position whenever necessary based on new information, but I hope that any drastic changes can be avoided.